The NHL's Post-Lockout ATM: Expansion

Published on 30-Jan-2013 by Fran Snarkenton
NHL / NHL Daily Update

The NHL's Post-Lockout ATM: Expansion

As the silly staredown sessions during the recent NHL lockout occasionally ventured off into actual negotiations, one chip never left the owners' stack at the bargaining table. And now, it looks like they're calculating the most opportune time to use it.

Not with the NHL Players Association, but with the cities who covet an NHL franchise.

What better way to realize in one shot the money the owners wanted on their side of the ledger but didn't get than to stoke the embers of expansion into a bellowing bonfire? It's a tried and true tactic in the North American pro sports world.

It looks like the NHL suits are in the public denial stage right now, and they've trotted out Bill Daly to do the denying. Apparently he's got more lives than the proverbial cat, since he survived all the negotiating hills he said the league would "die on" that were ultimately overtaken in the end by the charging NHLPA. Those proclamations haven't done his cred much good. So let's cut to the chase and accept that expansion is in the cards.

The only questions now are: What cities? When to do it? What's the exorbitant fee going to be?

The line-up of suitors will be more defined once the tragi-comedy that is the Phoenix Coyotes fate becomes clearer. Assuming that the 'Yotes remain in the desert -- and we all know what happens when you assume, but let's do it anyway -- six prime candidates will be clamoring for attention. In no particular order, here they are:

  1. Seattle, because it's the 12th largest market, it's close to Canada and a rivalry with the Canucks, and it has an arena plan approved in principle by the city and regional governments; rumors persist that ownership candidates are in full supply.
  2. Houston, because it's the 5th largest market, it's close to Dallas and a rivalry with the Stars, and, well, the NHL has never a chance to move a team out of there, à la Atlanta (twice) or Kansas City (once); never mind that a solid ownership group has yet to materialize.
  3. Kansas City, because it apparently misses the Scouts (who became the Rockies, who became the Devils) so much they built an arena on the come and, six years later, are still waiting for the NHL to come.
  4. Hamilton, because it finally has the NHL on record as saying Toronto doesn't have any veto power over putting a team there, if only it had a replacement for the fast-fading fortune of Blackberry's Jim Balsillie to nominate as a viable ownership group.
  5. Québec City, which is now duly repentant that its municipality had the brass to upset the Nordiques' ownership, which packed the team (complete with Peter Forsberg and Joe Sakic) off to Colorado where it earned a Stanley Cup immediately thereafter.
  6. Toronto, because it's the self-proclaimed center of the hockey world and apparently can no longer tolerate the implied inferiority of having two fewer franchises in its metro area than New York (besides, it deserves something for tolerating the Maple Leafs year after year after year), and the Markham Arena proposal continues to move forward, albeit gingerly.

Another clue that expansion is on the horizon can be found in the conference realignment that was announced in December. The East has two less teams than the West, so two more additions would be logical to complete the sets. Detroit and Columbus, both in the Eastern time zone, would love to move over there. The Red Wings clearly have more leverage than the Blue Jackets, and given the candidates, they may well get their wish. If so, look for Seattle and either Toronto or Québec City to get the nod. Otherwise, the latter two are sure fire cash cows and have got to be the favorites.

Given the well-deserved adverse publicity generated by the lockout, the NHL's recovery among its fans has been nothing short of astonishing. Ratings are strong in its coveted demographic brackets, and national broadcasters such as the NBC Sports Network have been very smart in how they've packaged the product.

Projecting those rosy results out a few years, the NHL should be able to charge an applicant upwards of $400million for the right to play in their league. Only last year, a Phoenix court filing estimated a fair expansion valuation of $265million as part of its diligence in the Coyotes' bankruptcy proceedings. Extrapolate that figure to the prospect of a second Toronto franchise; it wouldn't be a stretch to see a $500million payday upon its anointment. And here's the good part for the owners: they get all the fees to themselves.

Don't worry about the NHLPA, though. Hockey-related revenue from the expected expansion -- in which they do share -- is estimated to be around $100million.

When all this happens -- and give it 2-3 years to get the bitter taste of the lockout to subside -- the only hill Bill Daly will be describing will be more like a mountain, made of money. Lots and lots of money.

And the only dying you'll see there will be everyone dying to have a piece of it.

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